BCBS Restricts Competition, Suit Charges

A federal class action suit charges that Blue Cross and Blue Shield of Alabama and the Blue Cross Blue Shield Association have conspired to restrict competition to drive up health insurance premium costs.

The antitrust suit filed on behalf of chiropractor Jerry L. Conway, DC, and the customers of the Birmingham-based insurer, alleges that the trade group's licensing agreements with its 45 members give each Blues plan as "exclusive, competition-free slice of the healthcare market." As a result "healthcare providers are subject to much lower rates and less favourable terms."

The suit notes that BCBS Alabama controls access to 93% of healthcare insurance subscribers in the state, which makes it difficult for a provider not to agree to its reimbursement terms. "Most healthcare providers simply cannot survive economically as out-of-network providers."

Among the efforts to eliminate competition, according to the suit, is the trade group's restriction that a Blues' provider network can't be sold or transferred to non-Blue insurers. Because provider networks are intrinsic to the health insurance business, the restriction creates "an immense barrier" to market entry where a Blues plan dominates.